Sphera Franchise Group (SFG) Q2 2024 earnings summary

Executive summary

• Achieved record H1 2024 results in sales, EBITDA, and net profit, marking the best first semester in company history, driven by strong KFC and Taco Bell performance and cost control.

• Q2 2024 was the best second quarter in company history for sales, EBITDA, and net profit, with operating profit up 52.1% and net profit up 59.1% year-over-year.

• Continued network expansion with new KFC restaurant openings, especially in Romania, and focus on drive-through formats; closed underperforming Pizza Hut units.

• Maintained strong cost discipline, reducing restaurant expenses as a share of sales by three percentage points to 88.3% in H1 2024.

• Emphasized sustainability achievements, including sourcing 80% of purchasing budget from domestic suppliers and reducing electricity consumption by 3.63% year-over-year.

Financial highlights

• H1 2024 consolidated sales reached RON 740 million, up 6.4% year-over-year; net profit more than doubled to RON 40.7 million (+109.4% YoY); EBITDA rose 50.7% to RON 78.9 million; EBITDA margin increased 3.2pp to 10.7%.

• Q2 2024 sales were RON 374.1 million (+3.8% YoY); net profit was RON 19.2 million (+59.1% YoY); EBITDA was RON 39.1 million (+35.7% YoY).

• KFC H1 2024 sales: RON 644.6 million (+8.2% YoY); Pizza Hut: RON 53.1 million (-9.9% YoY); Taco Bell: RON 42.3 million (+4% YoY); KFC Moldova sales up 11.6%.

• Restaurant operating profit in H1 2024: RON 87.8 million (+44.8% YoY); operating profit: RON 56.2 million (+85.2% YoY).

• Net debt/EBITDA ratio at 0.4, reflecting a strong balance sheet.

Outlook and guidance

• Management remains confident in achieving full-year 2024 budget targets despite anticipated headwinds in H2, including inflation and potential economic slowdown.

• Management anticipates continued sales growth in H2 2024, with Q4 expected to be the strongest quarter, following historical seasonality.

• Plans to open three new locations in Italy annually starting next year; ongoing search for new brands to add to the portfolio.

• Continued focus on operational efficiencies and profitability as the group scales.

• The Board intends to propose an additional dividend distribution in H2 2024, subject to market conditions and budget achievement.